Goldman Sachs’ Heath P. Terry maintains a Neutral rating on the company, while raising the price target from $4.10 to $4.40.

Robust Quarter

Terry mentioned that the 2Q results were a “positive step change in FY profitability,” with revenue of $756 million and adjusted EBITDA of $34 million, versus the consensus expectations of $711 million and $22 million, respectively.

“We continue to believe Groupon’s 50mn active customers and base of local merchants give it a significant advantage in addressing the large local commerce market but, given the slower growth relative to the sector, we remain Neutral rated,” the analyst explained.

The revenue for the quarter was driven by North American revenue growth of 77.4 percent, offset by a decline in EMEA and ROW revenue, as Groupon continues to restructure parts of its international operations and footprints.

Guidance Raised

Management raised the FY16 revenue guidance from $2.75–$3.05 billion to $3.00–$3.10 billion, while also raising the adjusted EBITDA guidance from $85–$135 million to $140–$165 million, significantly ahead of the consensus forecasts.

The 2016–2018 revenue and adjusted EBITDA estimates have been raised to reflect the traction in the company’s marketing and restructuring initiatives.

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